June 11, 2001
Another Reason to Hate Lawyers
By Jonathan Blum

http://www.theneteconomy.com/article/0,3658,s%253D912%2526a%253D8645,00.asp

Having spent the better part of eight months chasing — and finally
crippling — the renegade online music service Napster, the music industry
now is looking to pick another fight. The Recording Industry Association of
America in late May slapped tiny online swapping service Aimster with a new
lawsuit. The action makes the RIAA part of a hot new club: * he litigating
media companies. The Motion Picture Association of America, publisher Harry
Fox Agency and network provider AOL Time Warner are already members.

Though these court actions may present an image of established media
getting serious about protecting digital content, it's really the worst
possible news for both consumers and network service providers.

Although games of legal hardball between businesses are standard for the
media world, lawsuits like those against Napster and Aimster aren't pitting
business against business. They're turning the consumer into the enemy. And
network operators ultimately may be the ones taking the bullets.

Already some content providers are feeling the backlash from their
litigation strategies. "Our message boards are filled with angry notes,"
says Johnny Deep, president of Aimster. Ian Clarke, founder of online
privacy group Freenet, says any victories by the media establishment will
be pyrrhic. "The record labels may have a short-term victory here against
Napster, but at what cost?" he says. "An entire generation now views these
companies with suspicion. For some of the very young, the Napster trial is
the Gulf War or the death of JFK or the Watergate trial. It's the defining
event of their generation."

OK, that may be a little over the top. But if it's even partially true,
it's chilling. The early 2000s may be remembered for digital content
lawsuits, not for something innocuous like bell bottoms or Jerry Springer.

Any marketer worth his clammy handshake knows how serious this is. The
early impressions of consumers define their brand loyalty throughout their
lives. That's how MTV has made a culture and a fortune — by catering to the
moods and feelings of young viewers no matter how outwardly awkward they
might be.

Get these buyers really mad, as the litigating media companies have done,
and the future gets cloudy fast. As new users come to distrust their
sources for digital content, they will happily turn to non-digital sources
to get music and movies. That cuts the network service provider right out
of the profit equation.

Today, there is a complete lack of marketing for new digital content.
Disney relentlessly promotes its assets across all platforms, including
film, home video, games and theme parks. Yet, there has been no effort to
build marketing support for digital material. Even the most basic ad
campaigns, like the familiar spots for DVDs that run before most rented
films, would be an excellent first step to explain and promote new
technologies to consumers.

Media companies should accept their new role as a service provider rather
than act like grubbing, greedy monopolists. With a new attitude, the
premise for offering enhanced digital content over a network would be a lot
simpler. Why not develop material with the network in mind rather than make
the same old dumb stuff and then bolt it on top of the network? If media
providers want to have a future, they may want to think about spending less
on digital content lawyers and more on digital content.

Until that happens, network service providers are at risk for having very
little to fill up all their fat pipes.